The Howe Company’s stockholders’ equity account follows:


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The earnings available for common stockholders from this period’s operations are

$100,000, which have been included as part of the $1.9 million retained earnings.

a. What is the maximum dividend per share that the firm can pay? (Assume that

legal capital includes all paid-in capital.)

b. If the firm has $160,000 in cash, what is the largest per-share dividend it can pay

without borrowing?

c. Indicate the accounts and changes, if any, that will result if the firm pays the dividends

indicated in parts a and b.

d. Indicate the effects of an $80,000 cash dividend on stockholders’ equity.